More notes: exploration upsideI want to shift my commentary now from the Moris Mine project, to the exploration potential in the surrounding area. This takes the discussion more from the direct operating considerations, into the strategic overall future for the company. Keep in mind that EXM began acquiring their projects several years ago, well before the boom in mining in Mexico, and when most of the good projects were up for grabs since there was very little competition. This means that they were able to control the best prospects, and they paid very cheap entry prices for their holdings.
If you consider yourself a casual investor, a speculator, no problem... Read no further, and go find something to watch on TV. But if you are a serious investor that wants to complete research and understand what you own and why it may outperform the sector, you need to go to the EXM website, and start by downloading the map on the "PROJECTS" menu: https://www.exmin.com/projects.html
You will find that the Moris Project is actually several claims and properties that comprise most of the district, and that the Moris Mine is just a very small part of that package. You will also note the large number of nearby past producing mines, and the favourable geological structure that is marked, including known veins and nearby fault lines. What you cannot see from that map is the rugged terrain of the area and that is one of the reasons I am so bullish on the project.
The Moris Mine is located on a steep hillside at the edge of the valley in which the town is situated. Directly across the valley lies and even higher ridgeline, and that area is controlled by EXM as part of the same JV deal with Hothschild. Craig Gibson, VP of exploration, acquired all of that area first, because he thought it was even more prospective than the Moris Mine itself. Hothschild saw the data that he had collected on the property, and then they got involved in the JV. It was after that the Moris Mine itself became available, and the two companies increased the scope of their relationship to take on the mine.
Now the most important consideration in all of this is that the mineral deposition in the entire area happened tens of millions of years ago. Thereafter, a sequence of volcanic actiivity affected region, and layers of ash and debris including extrusive rocks, were piled on top of the mineralized rock, sometimes to a depth of more than 100 meters. It is only in the areas where surface erosion has carved deep canyons into the overlying volcanic rock that the mineralized horizons are exposed and mining activity can happen.
The geologic model for Moris is that much of the upper layers of the deposit itself were also stripped away by the same forces of erosion. But the mineralized horizon extends to the other side of the canyon, into the higher mountain located there. We drove up a narrow winding one lane road for about half an hour to get to the top of that mountain, and there I was able to observe several outcropping vein structures with very high grade gold values, that were being selectively mined on a small scale by the original vendor of the property. This confirms the model that the vein potential vein structure of this side of the canyon may be much larger than the original Moris Mine, and also perhaps much higher in grade.
I reviewed the surface structure of the El Tecalote target on that mountain. During the drive back down to the town, about 500m below the mountain top, we stopped to review another vein structure that had been exposed by the road cut. Again, it was several meters wide, with very high grade ore that had been sampled. It was perhaps an offshoot or a parallel vein. And the veins have the same positive consideration in that they are on the hillside so perhaps they can be mined via an open pit, or with an adit driven in from the hillside to get at higher grade underground zones. Also, drilling platforms can be easily constructed to complete a drilling fan into the veins from a number of different angles, using the same road access. We could have another, larger Moris Mine right across the valley in other words, and the ore could be trucked and processed at the Moris Mill and recovery plant.
Further along the canyon is the El Pilar target, a series of narrow veins, with high grades of gold and silver in localized ore shoots. At least 7 of these veins have already been identified, and very limited exploration work has been done.
A third target, the La Cienega is a much larger structure with some historic mining activity targeting veins 4-30m in size. Highly brecciated minerlized material, similar to Moris, bearing lower grade gold across a wide potential tonnage, plus localized high grade zones, would make a very attractive development target. The is also a road running right through the target area. So once again we have a larger potential than the original mine.
Each of these nearby targets has the potential to develop into a stand-alone district. And the strength of the JV is from EXM contributing to the exploration (funded by Hothschild under the terms of the JV where they must spend $4.8 million US to earn 70%) and the developmental and operating strength of Hochschild.
So to return to the strategic considerations of all of this, EXM is leveraged to 30% of the revenues from the acquisition of the Moris Mine, which can then be used to fund additional exploration elsewhere, while Hothschild ramps up exploration work on the rest of the JV property area. Any new discovery in this extremely prospective area can be the foundation for increasing the scope of the mining in the district, and a beneficiary of the established recovery plant, as well as the administrative center there, and the experienced and trained workforce.
The strategy is brilliant, and EXM is carried along as 30% partner. All of this was accomplished through the investment to acquire the properties at a great value.
Hothschild is committed to grow Mexico into a growth center for their mining operations, and EXM is positioned to be a partner in that growth. I think shareholders can look forward to a series of positive development and exploration news from this area, that will build greater value as the pace and scope of the activity grows.
cheers!
COACH247
PS: Voluntary disclosure - EXM paid the direct travel expenses for my visit to the projects. I own shares in the company that I have bought in the market.